$ ffmpeg -i $1.avi -c:v h264 -c:a copy -b:v 1500k $2.mkv

Sample encoding 1200k video bitrate

$ ffmpeg -ss 00:15:00 -t 00:05:00 -i $1.avi -c:v h264 -c:a copy -b:v 1200k $2.mkv